A call-off contract, eg stationery, chemicals or personal computers, will require regular meetings, perhaps monthly at first and then quarterly, with the appointed supplier to ensure that orders are being fulfilled within the agreed terms. Where, for example, the management information shows that there is a significant increase in the expected level of business, there may be scope to investigate the possibility of improving the agreed terms.
The procurement of a major item of equipment - management and monitoring of this type of contract will include liaison with the supplier to ensure, in the first instance, that it will be installed and commissioned at the agreed date. Later, management could include reviewing maintenance visits, the equipment's performance etc. Where, for example, the volume of consumables is increasing, there may be scope to investigate the possibility of setting up a preferred-terms agreement, perhaps aggregating demand with other departments within the institution or with other institutions.
Service contracts can be the most challenging to manage and monitor especially where the service is intangible. Depending on the type of services, for example, the provision of staff to work within the institution the contract should include a service level agreement that outlines the roles, expectations and responsibilities of the parties to the agreement.
In other cases, such as the engagement of consultants, the project specification can be difficult to define in terms of the expected time, resources to complete the required task. In such cases, it is especially important that the engagement is managed as it is very easy for this type of requirement to overrun available budgets. This tends to happen where ‘another little bit of work is added’ and a relatively small commission snowballs out of control. Remember, the approach of the consultancy is to win the work (via some competitive process) and then to attract as much additional work as possible.
Useful guidance on contract management can be found at:
- Manage and monitor performance
- A Guide to Contract Management
- You and Your Contractor, a manual of best practice in contract and relationship management